I came across an excellent blog post written by Vacation Rental Industry expert, George Volsky, of Instant Software today. While not so dramatic on the Outer Banks due to our remote location, Rent-By-Owner (RBO) websites and services have started to spring up all over the place in other tourist destinations. This post reinforces the value in a Vacation Rental Management firm when having to manage an Outer Banks Rental from a distance.
Why Use a Rental Manager?
We occasionally hear homeowners ask about the tradeoffs between self-management and management services. Obviously managers cost money. Do managers earn it? Are they cost effective? This month, we share our answers to the question, “Why use a manager?”
RBOs Don’t Save Money. They “earn” it, doing some of American’s dirtiest work. The challenge is not just finding renters, but “fixing, cleaning, and taking care of the screaming guests:” Typical examples:
- Responding promptly to emails by impatient renters who are quick to look elsewhere;
- Answering 10 inquiries for every booking;
- Negotiating rent with bargain shopping renters;
- Responding to renters who argue that a malfunctioning hot tub justifies a full refund;
- Finding a back up cleaner when the regular cleaner doesn’t show up;
- Dealing with lost keys at 2 in the morning;
- Finding a vendor to remove unexpected snow that is blocking access to the home;
- Getting prompt response by an a/c repairman in the middle of summer.
Unplanned Problems. Are problems rare? Work-order statistics commonly reveal as many major problems per home as rentals! Managers are experts in the problems that routinely arise in putting a non-resident renter into a home owned by a non-resident. We anticipate and avoid recurring problems through preventive maintenance. We put together networks of service vendors who respond to us faster than they would respond to an individual homeowner because we send them so much business. We can keep backup cleaners on call because we have enough homes to keep them busy. Our cleaners serve as our eyes and ears for homes they don’t actually clean, helping us keep properties safe from unruly or unauthorized renters.
Liability. Many rent-by-owners expose their net worth by failing to inform their insurance companies that they are renting their vacation homes without using a professional manager.
Managers minimize homeowner’s liability by using:
- Bonded workers; and
- Workers covered by workers’ comp;
We use a professional laundry (do you know how many pathogens survive a household washer)?
Credit Cards. We can take credit cards, assuring more rentals. This is a credit card society where most renters want to either defer payments or earn miles by paying with credit cards–individuals can’t take cards and PayPal or third-party services are only partial solutions.
Tax. No one enjoys dealing with the tax man. It is not uncommon for RBOs to not charge tax. This may appeal to renters. But local tax authorities are mobilizing and starting to access homeowner’s Federal Tax returns (through PACE agreements) to identify homeowners who have reported the expenses associated with their rental homes. Managers relieve the homeowner of tax collection, tax reporting and, of course, interest, penalties and criminal penalties.
Refunds. We also earn our keep by relieving homeowners of the infrequent but inevitable nightmares– where heat or air systems break and the renter won’t remain in the home, or where weather prevents renters from getting to the home and they want their money back. RBO sites sell travel insurance, but usually not in a way that prevents uninsured renters from demanding a refund from the homeowner.
Slave to Phone and Computer. Most importantly, there is the question of bookings. RBO sites make it easier for owners to market their own properties, at least for homeowners who are willing to chain themselves to their phones and computers. Aggressive RBOs can generate as many bookings as a manager. But most RBOs lack the time or energy to respond promptly to the many non-booking inquiries. And you only need to look at the leading RBO sites to appreciate the challenge of maintaining availability calendars.
Discounting. RBO sites attract bargain shoppers. We have a larger pool of renters who are more interested in getting the home they want than in getting a bargain. RBO site renters often send multiple email requests soliciting discounts. We monitor the booking pattern of an rental program to determine whether we need to give discounts. We have a good sense of when to discount and by how much.
To summarize, management is not a fun or stress-free job. Self-management can work for a homeowner who is both motivated and willing to do a lot of work. Some who self-manage know what they are getting into. Others don’t yet appreciate how much stress is involved. We are equipped to do the heavy work for homeowners. We make vacation rental home ownership a more pleasant experience. Most of our homeowners prefer to hire us for that purpose whenever finances permit.
